NEW YORK--(BUSINESS WIRE)--Fitch Ratings has assigned a credit rating of 'BBB-' to the $500 million
unsecured term loan due 2020 entered into by Washington Prime Group,
L.P., a subsidiary of WP Glimcher Inc. (NYSE: WPG). The company intends
to use the proceeds to repay in full the outstanding indebtedness under,
and to terminate, the bridge term loan agreement dated Jan. 15, 2015 and
for other corporate purposes. The bridge loan was previously put in
place to facilitate the merger of Washington Prime Group, Inc. and
Glimcher Realty Trust (previously NYSE: GRT), which formed WP Glimcher
Inc. The Rating Outlook is Stable.

KEY RATING DRIVERS

The 'BBB-' IDR takes into account that WPG's leverage is expected to
improve towards the 6.0x-6.5x range over the next 12-to-24 months
compared with 7.0x as of March 31, 2015 pro forma. Pro forma adjustments
include the closing of the O'Connor Mall Partners, L.P. (O'Connor) joint
venture, which resulted in approximately $430 million of cash to WPG and
the transfer to O'Connor of a 49% share of the mortgage debt on the five
assets held by the joint venture, the term loan due 2020, refinancings
of mortgage debt on Pearlridge Center located in Aiea, Hawaii and
Scottsdale Quarter located in Scottsdale, Arizona and the redemption of
series G preferred stock. WPG's credit strengths include improved mall
and community center asset quality following the merger and WPG's
successful transition towards self-management thus far. WPG will retain
ties to Simon Property Group, Inc. (NYSE: SPG, IDR of 'A' with a Stable
Outlook), which spun off Washington Prime Group, Inc. in May 2014, for
the remaining duration of agreements related to WPG's separation from
SPG.

Joint Venture Improves Leverage; Still Above Pre-Merger Levels

Leverage is 7.0x as of March 31, 2015 pro forma, compared with 7.6x as
of March 31, 2015 normalized and 5.2x pre-merger for full-year 2014.
Leverage is typically higher in the first quarter of the year due to
EBITDA seasonality and March 31, 2015 pro forma leverage is before the
impact of merger synergies and the announced management transition
(addressed below), which the company estimates will result in $12-$16
million of expense savings by year-end 2016. A joint venture to reduce
WPG's corporate leverage and improve liquidity was among Fitch's
expectations at the time of the merger. The joint venture values the
assets at $1.625 billion implying a 5.25% capitalization rate,
indicating that the JV properties are certain of WPG's stronger assets.
The sale improves the company's leverage but also signaled the company's
willingness to monetize certain high quality assets such as Pearlridge
Center and Scottsdale Quarter.

WPG is targeting leverage of 6.0x-6.5x by 2016, and leverage sustaining
below 6.0x may result in positive momentum in the ratings and/or
Outlook. Fitch defines leverage as debt less readily available cash to
recurring operating EBITDA.

Material Improvement in Liquidity Position

The term loan due 2020 lifts uncertainty surrounding the bridge loan
repayment, which was scheduled to mature in January 2016, and WPG's
liquidity coverage ratio is 1.3x for April 1, 2015 through Dec. 31, 2016
pro forma. Fitch defines liquidity coverage as liquidity sources divided
by uses. Liquidity sources include unrestricted cash, availability under
the company's revolving credit facility, and projected retained cash
flows from operating activities. Liquidity uses include pro rata debt
maturities, projected recurring capital expenditures, and cost to
complete development through 2016. Should the company refinance 80% of
secured debt maturities through 2016, which is not Fitch's expectation,
liquidity coverage would improve to 2.9x. Following the Pearlridge
Center and Scottsdale Quarter mortgage refinancings, the company now has
$475.5 million of secured debt maturing through 2016 down from $842.1
million as of March 31, 2015.

The company's contingent liquidity, as measured by unencumbered assets
(unencumbered net operating income [NOI] divided by a stressed 8.5%
capitalization rate) to net unsecured debt is 2.1x pro forma, which is
adequate for the 'BBB-' rating.

Solid Fixed-Charge Coverage

On April 15, 2015, WPG redeemed its 8.125% series G preferred stock.
Fixed-charge coverage was 3.3x pro forma, which is solid for the 'BBB-'
rating, flat when compared with 1Q2015. However, the repurchase was a
leveraging transaction on the margin as Fitch considers preferred stock
as equity. Fitch anticipates that this ratio will remain around
3.0x-3.5x for the next several years. Fitch defines fixed-charge
coverage as recurring operating EBITDA less recurring capital
expenditures and straight-line rent adjustments divided by interest
incurred and preferred stock dividends.

Diversified Tenant Base; Exposure to Sears and JC Penney

The GRT merger improved WPG's asset quality as measured by increased
stabilized mall sales per square foot and rents (rents were $21.11 as of
March 31, 2015 compared with $21.00 as of Dec. 31, 2014), which Fitch
views favorably. Occupancy declined sequentially, however, to 91.9% as
of March 31, 2015 from 93.2% as of Dec. 31, 2014. The merger also
deepened WPG's presence in Midwest markets, while expanding the
footprint in California, Florida and Texas.

Tenant concentration is limited, and top tenants include Signet Jewelers
at 3.2% of total base minimum rent, L Brands Inc. (IDR of 'BB+' with a
Stable Outlook) at 2.7% and Foot Locker Inc. at 2.2%. Exposure to weaker
tenants such as Sears Holding Corp. (IDR of 'CC') and JCPenney Company,
Inc. (IDR of 'CCC') is manageable at only 1.2% and 1.4% of rent,
respectively. However, these are the largest two tenants by gross
leaseable area at 12.2% and 9.1%, respectively, a credit concern given
the potential impact that an anchor's traffic and viability has on the
overall mall's traffic.

Management Transition

On June 1, 2015, WPG announced that Mark Ordan, currently the Executive
Chairman of the Board, will transition to serve as non-executive
Chairman of the Board effective as of January 1, 2016. Michael Glimcher
will continue to serve as the Company's Vice Chairman and Chief
Executive Officer. Merger integration was effectuated under Ordan's
leadership, and this announcement creates a simpler senior management
structure going forward and should comprise a component of the $12
million to $16 million of estimated general and administrative expense
and property operating expense merger synergies by year-end 2016.

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